Why Retirees Should Choose DIAs over SPIAs

My new column at Advisor Perspectives is called, “Why Retirees Should Choose DIAs over SPIAs.” In the past, I’ve written about the efficient frontier of retirement income, finding that retirees can best satisfy twin goals of preserving their lifestyle spending needs in…

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Claiming Social Security at 62 or 70

A consensus in the financial planning profession is that while the Social Security claiming decision is quite difficult and there can be exceptions, it is often beneficial to delay the receipt of Social Security retirement benefits. I will provide an exploration of…

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Risk and Retirement Finances

In my last blog post, I described a recent article by Paula Hogan and Rick Miller about different approaches to financial planning.  I’d to come back to an issue from that article related to risk management for retirement finances. They make a…

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Deciphering the Annuity Puzzle

My Advisor Perspectives column for July is now available. It is, “Deciphering the Annuity Puzzle: Practical Guidance for Advisors.” In this column, I explain the economic theory behind the puzzle. The puzzling issue is why people do not annuitize more of their…

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It is Optimal for Retirees to Plan for Reduced Spending with Age

A general assumption is that people plan to spend a constant inflation-adjusted amount for as long as they live. However, this spending plan is actually not optimal for any reasonable set of preferences about the tradeoff between spending now and later, even if we assume that future market returns are known in advance.

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Why Do Economists Say There is an Annuity Puzzle?

Economists are known for describing the annuity puzzle. The puzzle is: why do people not purchase income annuities (exchange a lump sum payment for a guaranteed lifetime income stream) to the extent predicted by economic theory? A number of explanations have been…

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